Ralph Lauren Corporation RL is set to report first-quarter fiscal 2025 results on Aug 7, before market open. The Zacks Consensus Estimate for revenues is pegged at $1.49 billion, which indicates a decrease of 0.6% from the year-ago quarter’s reported figure.
The Zacks Consensus Estimate for earnings is pegged at $2.45 per share, which suggests growth of 4.7% from the year-earlier actual. The consensus mark for earnings has moved up 0.4% in the past 30 days.
In the last reported quarter, the company’s bottom line outperformed the Zacks Consensus Estimate by 3.6%. Ralph Lauren has a trailing four-quarter earnings surprise of 10%, on average.
Ralph Lauren Corporation Price and EPS Surprise
Ralph Lauren Corporation price-eps-surprise | Ralph Lauren Corporation Quote
Factors to Consider
Ralph Lauren has been gaining from strong brand recognition, robust demand and expansion across all channels and regions. Its "Drive the Core and Expand for More" initiative has strategically positioned the company for success in the fiscal first quarter.
With market trends showing that consumers have been getting increasingly drawn to trusted brands and enduring styles, Ralph Lauren’s strong brand identity and authentic, globally recognized lifestyle portfolio continue to resonate with a diverse customer base, setting it apart from the competition. This initiative bolsters the company’s core strengths and prepares it to seize market opportunities in the to-be-reported quarter.
Additionally, Ralph Lauren has been experiencing growth in its digital and omni-channel business, significantly increasing customer acquisition and loyalty. The company added more than 5 million consumers to its direct-to-consumer business in fiscal 2024, highlighting the effectiveness of its strategies and the strong appeal of its products — an impact expected to be reflected in the fiscal first-quarter performance.
The company's strategy centers on building a sustainable and resilient model with diverse drivers that position it well for growth and value creation. These initiatives' gains are expected to get reflected in its top and bottom-line results for the fiscal first quarter.
On its last reported quarter’searnings call management anticipated constant-currency revenues to increase slightly for first-quarter fiscal 2025. On a reported basis, revenues are projected to be down slightly year over year. This includes approximately 50 bps of negative impacts of the earlier timing of Easter.
RL anticipates the operating margin to expand 60-80 bps on a constant-currency basis on an increased gross margin, offset by higher operating expenses, which are weighted toward the fiscal first quarter due to the timing of marketing activations, notably the fashion show. The gross margin is expected to grow 140-180 bps on lower cotton costs and AUR growth.
Our model estimates the adjusted gross margin to expand 100 bps year over year to 69.8% in the fiscal first quarter. We expect the adjusted operating margin to contract 10 bps for the fiscal first quarter to 13.3%.
However, the company has been facing challenges in its North America segment, particularly within the wholesale channel, which has underperformed for some time. Higher promotions in the North America market and an unfavorable timing shift in wholesale operations have been significant obstacles. Additionally, ongoing inflationary pressures have been concerning.
Looking ahead, management remains cautious about the North America division's performance, especially within the wholesale channel. The company anticipates underlying growth in this channel to improve as the year progresses, although some quarterly fluctuations are expected due to the timing of shipments. These timing issues are likely to have negatively impacted wholesale sales in the to-be-reported quarter.
We project revenues in North America’s wholesale unit to decline 3.1% year over year for the first quarter of fiscal 2025.
Furthermore, management anticipates the first-quarter fiscal 2025 results for Europe to reflect the impacts of the region’s highly dynamic geopolitical and macroeconomic conditions. We expect European revenues to decrease 0.1% year over year for the fiscal first quarter.
The company’s consolidated forecast for the fiscal first quarter includes headwinds from inflationary pressures, challenges in consumer spending, potential supply-chain disruptions and foreign currency volatility. While management expects a generally stable freight environment, the disruption in the Red Sea is projected to have created a modest headwind.
For the fiscal first quarter, management anticipates revenue results to reflect negative foreign currency impacts of 160 bps. Additionally, foreign currency fluctuation is expected to hurt the gross and operating margins by 40 bps each.
What the Zacks Model Unveils
Our proven model predicts a likely earnings beat for Ralph Lauren this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Ralph Lauren currently has an Earnings ESP of +1.48% and a Zacks Rank #3.
Other Stocks With Favorable Combination
Here are some other stocks that investors may consider, as our model suggests that these, too, have the right combination of elements to post an earnings beat this time around.
lululemon athletica LULU currently has an Earnings ESP of +0.66% and a Zacks Rank #3. The Zacks Consensus Estimate for quarterly earnings per share of $2.96 suggests a rise of 10.5% from the year-earlier reported level. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus mark for revenues is pegged at $2.4 billion, indicating an increase of 10.2% from the figure reported in the year-ago quarter. LULU has an average earnings surprise of 7.4% in the trailing four quarters.
Under Armour UAA currently has an Earnings ESP of +15.74% and a Zacks Rank #3. The Zacks Consensus Estimate for the quarterly loss per share is pegged at 8 cents compared with earnings of 2 cents in the prior-year quarter.
The consensus mark for revenues is pegged at $1.1 billion, indicating a decrease of 13.5% from the figure reported in the prior-year quarter. UAA has a trailing four-quarter earnings surprise of 77.7%, on average.
Disney DIS currently has an Earnings ESP of +1.25% and a Zacks Rank #3. The Zacks Consensus Estimate for revenues is pegged at $22.9 billion, suggesting a rise of 2.4% from the figure reported in the year-ago quarter.
The consensus mark for quarterly earnings per share of $1.20 per share indicates a rise of 16.5% from the year-earlier reported level. DIS has an average earnings surprise of 15.1% in the trailing four quarters.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Ralph Lauren Corporation (RL) : Free Stock Analysis Report
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Under Armour, Inc. (UAA) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
